Calavo Growers reported record third-quarter earnings, shattering analyst expectations.
The Santa Paula-based produce marketer earned $16 million, or $1.02 per share, in the third quarter, up from $6.4 million, or 43 cents per share, a year earlier. it said in Sept. 15 filings.
On average, analysts had been expecting earnings of 46 cents per share, according to a survey by Zacks Investment Research.
The earnings jump was attributable to higher sales — revenues rose 12.2 percent to $218.7 million — but also a $12.6 million non-operating gain related to its deconsolidation of its FreshRealm spinout.
“Calavo’s third-quarter operating performance was outstanding by every measure,” CEO, President and Chairman Lee Cole said in a statement. “The company executed extremely well across our three principal business segments — each of which posted top-line gains — paced by double-digit sales growth at Renaissance Food Group and Calavo Foods.”
Renaissance Food Group, the Calavo subsidiary that supplies ready-made foods such as salads and sandwiches to supermarkets, posted revenue growth of 31.1 percent to $71.8 million. The company’s Calavo Foods segment, which includes prepared foods such as guacamole, climbed 17.5 percent to $17.1 million.
The company’s fresh-foods segments, which includes its traditional business lines of marketing and selling whole avocados and lemons, posted a smaller increase, with revenues inching up 3.3 percent to $129.8 million. “In the fresh business segment, Calavo profitably managed sales and marketing of avocados sourced from Mexico to register substantial year-over-year revenue and gross margin improvement,” Cole said in his statement. “Our strong, profitable supply of fresh avocados from Mexico during the third quarter enabled the company to offset this year’s small California harvest without missing a beat.”
The company said it again expects to report record earnings in the fourth quarter.
FreshRealm launches with Nutrisystem deal
FreshRealm, a Ventura-based food-delivery startup that was spun out of Calavo Growers earlier this year, has launched its service and signed Nutrisystem as its first merchant.
FreshRealm was spun out of Calavo, which retains a 50 percent ownership stake, in May, after raising $10 million from outside investors. The startup is one of several food-delivery concepts sprouting up in cities around the country and would compete with efforts such as AmazonFresh, the Seattle-based e-commerce giant’s rollout of same-day grocery delivery in select cities.
FreshRealm’s system is a cloud-based ordering platform that works with its proprietary delivery box, called a Vessel. The temperature-controlled, reusable container is designed to keep fruits and vegetables, snacks and meals while they’re being shipped directly to consumers.
Nutrisystem is the first food merchant to use the platform, Calavo said in regulatory filings, and is experimenting to see how FreshRealm works for delivering its diet foods. The initial launch was only in California, but FreshRealm plans to roll out in other regions and with other merchants in coming quarters.
“We live in a world where pretty much everything in our lives is delivered to us except food,” CEO Michael Lippold told the Business Times in June. “FreshRealm, on many levels, is built on the theory, ‘we can do better.’ ”
Calavo subsidiary Renaissance Food Group is the first food maker for FreshRealm’s business partners who want to customize freshly prepared snacks and meals for delivery to their customers’ homes or offices.
Venture-capital firms have invested more than $310 million in food-based businesses, according to technology news website The Information.